Have you ever heard about Zhong Shanshan?
At the end of 2020, Zhong Shanshan actually became the richest person in Asia with a net
worth of $77.8 billion.
His net worth didn’t just stop there either, in January of 2021, Shanshan would reach a
peak net worth of $95 billion.
Since then, his net worth has cooled off quite substantially as he now sits at the high $60
billion mark.
But given that he was at just $2 billion a year ago, I don’t think he’s complaining.
The first assumption I had when I read about this was that Shanshan likely founded China’s
next tech or manufacturing giant.
But, in reality, Shanshan’s wealth doesn’t come from selling high margin software or
high volume consumer goods.
No, Shanshan actually made his fortune selling bottled water.
Wait a minute, this makes no sense.
A bottled water company founder is wealthier than the founders of Alibaba, Tencent, and
Foxconn and he made most of his wealth in a single year?
Clearly, there’s more going on here than what meets the eye.
So, here’s the story of how Zhong Shanshan really became Asia’s richest person by just
selling water.
Before we get into Shanshan’s story, let's first lay out some context as to how absurd
this achievement is.
The beverage industry is basically impossible to break into due to insanely low profit margins
and how much of a stronghold the market leaders have.
Just take a look at the most popular bottled water companies such as aquafina, Dasani,
Nestle waters, and smart water.
Aside from Nestle waters which is obviously made by Nestle, the other brands don’t seem
to be associated with large conglomerates.
Though their name doesn’t suggest such a relationship, Aquafina is actually owned by
Pepsi, dasani is owned by coca cola, and smart water is owned by energy brands which is owned
by coca cola.
Pepsi and Coca Cola basically own the beverage industry mainly because they were the first
people there, so it’s no wonder why Kevin O’leary obliterates every beverage company
that makes its way onto shark tank.
With all of that being said, let’s take a look at how Shanshan defied the odds.
Starting off, Shanshan was born in Hangzhou China in 1954.
We’ve heard of top billionaires dropping out of college and sometimes even high school,
but Shanshan actually dropped out of elementary school at the age of 12.
Unlike other billionaires though, he didn’t drop out to start his own business.
He was actually forced to drop out because of the cultural revolution.
The cultural revolution was a massive communist led uprising within China designed to purge
the country of capitalists.
During the revolution, all economic activity was halted and hundreds of thousands of people
would die.
Shanshan’s parents would be one of the people that were persecuted by the authorities.
So, education was one of the last things on Shanshan’s mind and he would find a rather
uncontroversial job in construction throughout his teenage years.
Right after the cultural revolution ended in 1976 though, Shanshan would be quick to
go to college at the Zhejiang Radio & TV University where he studied Chinese.
This degree led him to picking up a job as a journalist at Zhejiang Daily up until 1988.
Till this point, Shanshan had mainly just worked on getting by and making sure he had
food on the table.
However, as economic restrictions became looser in the late 1980s, Shanshan would start his
first business in 1988.
This business was a very simple grocery business that Shanshan ran at a tourist island named
Hainan.
He ended up selling mushrooms, prawns, and turtles to tourists and locals, but this effort
didn’t last too long.
We aren’t exactly sure why he gave up this local business, but Shanshan would end up
getting another job.
This time, he worked as a sales agent at the Wahaha beverage company.
And this is where he would get the idea to start his own beverage company.
You see, bottled water was and still is extremely popular within China and for good reason.
Unlike the US where I still have no clue as to why people buy bottled water, in China,
natural water sources are oftentimes heavily polluted due to the significant amounts of
manufacturing activity.
Also, the sewage and water treatment facilities in China are quite terrible.
Not to mention, many of the water pipes in China were installed before 1968, and the
pipes have significantly rusted since then.
So, drinking tap water in China is a serious health risk as it often contains large amounts
of bacteria, viruses, chlorine, lead, mercury, aluminum, and who knows what else.
Given the undrinkable nature of tap water, basically all of China had resorted to buying
bottled water and more specifically distilled bottled water.
Now, distilled water is perfectly safe to drink, but it does lack the dissolved minerals
that regular clean drinking water has.
This includes minerals like calcium and magnesium which are actually beneficial for health.
In the 1990s, China had plenty of distilled water brands, but it seemed like no one was
offering simple clean drinking water with minerals.
And this is precisely what Shanshan would target.
In 1996, Shanshan would found a bottled water company which would eventually become Nongfu
Spring.
Their primary marketing pitch was that unlike the rest of the industry, they didn’t remove
natural minerals from their water.
Given that the Chinese people were already a bit worried about just drinking distilled
water with no minerals, Nongfu springs took off.
After this major success, Nongfu springs would go ahead and launch a variety of fruit drinks
in 2003.
Nongfu springs did specifically target teenagers with these fruit drinks and they did try to
craft some unique marketing material.
But by this point, the brand image is what was really propelling Nongfu forward.
Within China, Nongfu springs became known as the up and coming beverage company that
was more natural and healthier than rest.
And this perception allowed them to roll out a handful of new products over the next decade
including vitamin water in 2010, sugar free tea in 2011, milk tea in 2012, orange and
apple juice in 2016, and most recently coffee in 2019.
In the meantime, they have also expanded their water production to pull water from 10 different
natural sources throughout china and even one in new Zealand.
Aside from expanding their product lineup, Shanshan has placed significant emphasis on
marketing to grow the business.
One notable instance of clever product placement was during the 2016 G20 leader’s summit.
Shanshan was able to get Nongfu water into the event and presidents Xi, Obama, Putin,
Trudeau and many others would end up sipping the mineral rich water throughout the event.
Similarly, in 2017, Nongfu would spend $18 million to become the title sponsor of the
first season of Rap of China.
This was of course an effort to appeal to China’s youth.
Anyway, through such clever marketing moves and positioning in the marketplace, Shanshan
was successfully able to break into the bottled water industry and grow Nongfu springs into
a multi billion dollar business while growing his personal wealth to $2 billion by 2020.
So, that's the more natural part of Shanshan’s business success.
Of course, he always had the blessings of the CCP as you can’t achieve any sort of
business success in China without that.
But, in 2020, Shanshan would transition from just being on the good side of the CCP to
being their star child.
Over the years, the CCP has had a very complicated relationship with billionaires and business
tycoons within the country.
As the name of the party suggests, they are communist and believe in communist ideologies.
This includes the idea that all property is publicly owned and that each person works
and is paid according to their abilities and needs.
Ideally, there would be no billionaires or business moguls in such a system, and that’s
how it was in the 1950s and 1960s.
But, since the death of Mao Zedong, the CCP has gotten looser and looser when it comes
to the economy.
You see, the CCP realized in the 1970s and 80s that they couldn’t continue to limit
economic freedom if they wanted to grow into a world power.
So, they started letting people open businesses which grew China's economic output and allowed
them to compete on a world stage.
Don’t let this freedom fool you though, billionaires in China are handpicked by the
CCP and closely monitored to ensure that these billionaires don’t step out of line.
If they do step out of line and oppose the CCP or try to flee the country, the CCP will
be sure to take appropriate action.
Many people like to speculate that nefarious things happen to these billionaires, but we’re
not going to go down that road in this video.
If you guys are interested in this topic, then be sure to check out Jake Tran’s video
on the subject.
What we can confirm though is that the businesses of such billionaires will be punished with
restrictive regulation and litigation.
Meanwhile, billionaires who are on the good side of the CCP will be blessed with loose
regulation and aid from the government.
And it seems like Zhong Shanshan just replaced Jack Ma as the star child of the CCP.
If you guys didn’t know, Jack Ma founded Alibaba and used to be China’s richest man.
However, in late October he would make some remarks that the CCP weren’t big fans of.
And after this, he would go missing for 3 months before making a low key return and
laying low ever since.
A striking difference between Jack Ma and Zhong Shanshan is their personalities.
Jack Ma is extremely charismatic and outspoken while Shanshan is extremely reserved and quiet.
Maybe the CCP realized that they shouldn’t bet on outspoken individuals like Jack Ma
when it comes to representing the elite class of China.
And this is where things get interesting.
After Jack Ma’s comments, on November 13, 2020, president Xi would go ahead and personally
stop the IPO of ant group which is another company founded by Jack Ma.
On this exact same day, Nongfu stock would start to pump after two months of stagnation.
Within the next two trading days, Nongfu stock would rally 20%.
But here’s the thing, there was no news from Nongfu.
No press releases, no new products, no earnings reports, nothing.
And guess what, this pump was exactly enough to get Zhong Shanshan to overtake Jack Ma
as China’s richest man on November 17, 2020.
After this random pump though, the stock would go back into stagnation mode for the next
month.
Between December 15 and January 8 though, Nongfu Spring stock would roar upwards once
again growing a massive 50% within weeks.
But once again, there was no major news coming out from Nongfu during this time period either.
There was, however, massive news coming out about Jack Ma though.
Between December 13 and December 31, every news organization was busy covering how Jack
Ma had lost billions and how he didn’t even attend his own talent show.
We saw headlines like How China Lost Patience with Jack Ma, Its Loudest Billionaire.
Jack Ma's wealth tumbles by $12 billion in 2 months as China seeks to shrink the billionaire's
financial empire.
Jack Ma disappears from his own talent show and so on and so forth.
At the exact same time, we also saw articles describing how Zhong Shanshan just became
the richest person in Asia.
It almost seems like wealth was being transferred from Jack Ma to Zhong and that Zhong’s rise
to the top was being used to reduce news coverage surrounding Jack ma’s disappearance.
It doesn't just stop right there either.
At the end of January, Jack Ma would make a return, and suddenly all of Zhong’s new
found wealth would disappear shortly after as Nongfu stock crashed from $65 a share back
down to $40 a share, exactly where it was in September and october.
And during this entire time period, there were no negative news pieces coming out about
Nongfu.
I mean if you just take a look at the stock graph, it seems like a pump and dump.
And just keep in mind, this is not a company like Tesla or Apple that is fueled by hype.
This is a water bottle company.
This isn’t to say that Nongfu is not a legitimate company or that Zhong didn’t work extremely
hard to build Nongfu into a multi billion dollar conglomerate.
But more recently, it does seem like there's more happening than what meets the eye.
What do you guys think about Zhong’s journey to the top?
Comment that down below.
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